CHAPTER XIV.
THE MECHANISM OF CAPITALIST EXPANSION.
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So far we have considered separately the main elements in the capitalist cycle of production: we have briefly discussed the main natural forces and natural laws which derive from them.
Now we should be able to understand more clearly the mechanism of capitalist expansion, which, once put into motion, has gathered such momentum that no force on Earth could have stopped it until it had exhausted all the forces and altered all the factors and the environment which have brought it to life.
We have seen that the capitalist is motivated by the prospect of profit; competition in the market compels him to continually attempt to lower the cost of production by keeping wages down and or by replacing labour with new machinery.
We should understand by now that the capitalists can never stop for long to enjoy the fruits of their success in raising productivity. As soon as one slows down he is in danger of being overtaken by the competition. Therefore, they are compelled to chase their own tails in a race from which they cannot easily withdraw (Marx).
The process of capitalist expansion started very slowly during the Middle Ages, but, during the last two centuries, it has accelerated and gained momentum to such an extent that it has almost completely changed the face of the Earth, and it has shaken Humanity out of its slow pace of evolution.
Changes have been brought about so fast that the Human race has been thrown into confusion, incapable to fully adjust to ever new situations. While still blinded by our ignorance, today we are forced to choose between different alternatives, one of which may bring about our complete destruction.
Adam Smith, in the eighteenth century, could not have foreseen the extent of this expansion. But Carl Marx, a century later, was in a better position to study the capitalist system of production as it accelerated its development during the Industrial Revolution. His analysis, in "Capital" and other writings, is still basically valid today, except for those new factors and developments in the present stage that no Human being could possibly have foreseen one hundred and fifty years ago.
In the last of a series of lectures entitled "Wage Labour and Capital", which he gave in December l847, we find a very accurate description of the mechanism of capitalist expansion and evolution.
These are the main points: a capitalist to be able to compete, must produce and sell more cheaply. To produce more cheaply, he must raise the productive forces of labour. To raise the productivity of labour he must reorganise and streamline his workforce, use new technology and machinery; in short, he must adopt more efficient methods of production.
If he succeeds in producing more and cheaper commodities, he must sell more in order to obtain the full benefit of his increased production; therefore, he must find new markets and new outlets, selling his commodities at a price slightly lower than his competitors.
For a period of time he will have the advantage. But soon the other producers will adopt the same or newer methods of production, and, eventually, he will find himself in the same situation relative his competitors as before his improvement in productivity; the only difference being that now there would be overall higher production, and the markets would have been expanded.
Consequently, to be able to stay in business the capitalist must continually try to raise the productivity of his workforce and his machinery, and also try to find new markets:
".. however powerful the means of production which a capitalist brings into the field, competition will make these means of production universal, and from the moment when it has made them universal, the only result of the greater fruitfulness of his capital is that he must now supply for the same price ten, twenty, a hundred times as much as before. But as he must sell perhaps a thousand times as much as before in order to outweigh the lower selling price by the greater amount of the product sold. . . . this mass sale becomes a question of life and death not only for him but also for his rivals, the old struggle begins again all the more violently the more fruitful the already discovered means of production are. The division of labour and the application of machinery, therefore, will go on anew on an incomparably greater scale..."
The capitalist is forced to continually expand, to adopt new technology of production. He cannot wait until the opposition has found a way to come on top, he must keep on improving his productivity and replacing his machinery even before they have been fully utilised.
The instruments of production become more and more expensive, the small capitalist cannot compete against the bigger ones: "...If we now picture to ourselves this feverish simultaneous agitation on the whole world market, it will be comprehensible how the growth, accumulation and concentration of capital results in an uninterrupted division of labour, and the application of new and the perfecting of old machinery precipitately and on an ever more gigantic scale.... "
This expansion, caused by the law of the market and by competition, eventually produces a situation in which monopolies and corporations must develop:
"..... It is self evident that the small industrialist cannot survive in a contest in which one of the main conditions is to produce on an ever greater scale, that is, precisely, to be a large and not a small industrialist. "
Finally, as the continuous increase in productivity overtakes the capacity of the market to absorb the increasing quantity of commodities,
" . . .there is a corresponding increase in industrial earthquakes, in which the trading world can only maintain itself by sacrificing a part of wealth, of products and even of productive forces to the gods of the nether world: in a word, crises increase. They become more frequent and more violent, if only because, as the mass of production, and consequently the need for extended markets, grows, the world market becomes more and more contracted, fewer and fewer markets remain available for exploitation. “In this way, the capitalist socio-economic system, moved by this almost mechanical law of capital and technological expansion on this small Planet, must eventually reach certain natural limits beyond which it can only continue in an artificial and irrational form.